Daewoo E&C raided in growing bribery scandal

Prosecutors yesterday raided the headquarters of Daewoo Engineering and Construction after they secured evidence that a senior executive of Daewoo gave gift certificates to Chang Soo-man, commissioner of the Defense Acquisition Program Agency, in return for business favors.

The raid follows just a day after Chang offered his resignation over a related graft scandal.

Prosecutors summoned and questioned Daewoo E&C CEO Seo Jong-uk on Wednesday in connection with the bribery allegations after they obtained testimony from company officials that Seo gave gift certificates to Chang.

Prosecutors said Seo denied allegations that the gifts were bribes for the construction deal. He said they were “customary presents” for Chuseok, the Korean harvest holiday.

According to the Seoul Eastern District Prosecutors’ Office, Chang allegedly received some of 13 million won ($11,652) worth of gift certificates from the company in September in return for favors in a military unit relocation project.

Prosecutors said Chang last month asked his tax accountant and personal friend surnamed Lee to keep the gift certificates and 50 million won in cash after he was suspected of receiving kickbacks from a businessman, Yu Sang-bong.

Yu was indicted in November on suspicions of giving bribes to former and current senior police officials, including former National Police Agency Commissioner Kang Hee-rak in return for helping him win the rights to run makeshift canteens at construction sites across the country in 2009.

Prosecutors said they found that 8 million won of Chang’s 13 million won worth of gift certificates was purchased by Daewoo E&C. They suspect that the other 5 million won and the 50 million won in cash are black, or suspicious, money, given that Chang asked his tax accountant to keep the money.

Prosecutors are looking into the possibility that the construction firm gave the gift certificates to Chang to win his favor. The company won the relocation project last April when he was vice defense minister.

The project will relocate the Special Warfare Command and an airborne unit in Songpa District, Seoul, to Icheon, Gyeonggi, and is worth 407.8 billion won. Prosecutors said it was the most expensive construction project ordered by the government last year.

Prosecutors plan to summon and question Chang today in connection with the allegations.

Daewoo E&C refuted allegations that the gift certificates were a bribe.

“It was a customary Chuseok gift, not bribes for a construction deal,” an official at the company said. “If any favors were involved, we would never have bought the gift certificates with the corporate credit card, which can be traced by prosecutors.”

By Kim Mi-ju, Shim Sae-rom [mijukim@joongang.co.kr]